Charlotte Higgins, Bell & Buxton company and commercial solicitor advises on changes to the furlough scheme
The Chancellor has announced changes to the furlough leave scheme, which will be implemented on 1 July.
There are a raft of new changes, which may be hard to get your head around. Many of the changes have been regarded as confusing in recent press reports, so here is what you need to know.
Phased return to work
As it stands at present, employees cannot work for the same company while on furlough leave.
These changes will see employees returning to work on a part-time basis, and at the same time, being able to access the furlough scheme.
It is up to the employer how many hours the employee works, and the employer must pay the employee in full for the hours worked. The Government will then pay up to 80 per cent, up to a cap of £2,500, for the hours the employee is unable to work.
The time frame for being enrolled on the furlough scheme has passed
The furlough scheme is closing to new entrants on 30 June. This means that employees must have agreed and been placed on furlough leave by 10 June. This is because furlough leave must be for a minimum of three consecutive weeks.
Three-week rule change
Initially, employees had to be placed on furlough leave for a minimum period of three weeks, but from 1 July, there will be no limit to the amount of time the employee can be furloughed for.
Although there is no minimum furlough period after 1 July, the minimum HMRC claim period that employees can claim for is seven calendar days. This means that employers cannot make claims that cross calendar months, any claim period must start and end within the same calendar month.
From August 2020, furlough will be phased out, here’s how:
From August: the government will pay 80 per cent of wages of furloughed staff capped at £2,500 – employers will have to pay employer NICs and pension contributions for the hours the employee does not work.
From September: the government will pay 70 per cent of wages up to a cap of £2,187.50 for the hours the employee does not work – employers will pay 10 per cent of wages (up to £312.50 per furloughed worker) to make up 80 per cent total up to a cap of £2,500 plus employer NICs and pension contributions for hours not worked.
From October: the government will pay 60 per cent of wages up to a cap of £1,875 for the hours the employee does not work – employers will pay 20 per cent of wages (up to £625 per furloughed worker) to make up 80 per cent total up to a cap of £2,500 and pay employer NICs and pension contributions for hours not worked.
Should you require any further advice in relation to flexi-furlough, please contact Charlotte Higgins on 0114 249 5969.